Listed NZ companies poised to reveal slow growth

Interim Results. Source / Forsyth Barr reporting season update

New Zealand's top listed companies are expected to collectively reveal low, single-digit growth this reporting season and industry commentators say predicting the year ahead will remain tough.

PGG Wrightson will be first off the block today with its half-year result, while the market's second largest company, Telecom, is to report on Friday.

But forecast predictions by Forsyth Barr show the average sales growth across 40 companies is expected to be just 2.1 per cent with reported profits (before abnormals) up an average of 7.1 per cent.

BT Funds Management's Matt Goodson predicted results would be mixed. "I would expect it to be a mediocre result season."

He said one trend that had already emerged was the absence of strong consumer spending late last year.

The Warehouse, Hallenstein Glasson and Pumpkin Patch have all forecast profit downgrades in recent weeks, although Kathmandu bucked the trend with an upgrade.

"There have been one or two exceptions but in general the consumer seems to be keeping their hands in their pockets."

Goodson said there seemed to be a mismatch with consumer behaviour and business confidence.

"Business confidence appears to be a little stronger than the behaviour of the consumer. It's unclear whether the consumer will lift their game or whether business confidence will fall a little."

He said a key difference in this year's reporting season was the strong balance sheets of companies.

Overseas that had already resulted in a pick-up in merger and acquisition activity in the United States and Australia.

"I wouldn't be surprised to also see a small amount here."

AMP head of equities Guy Elliffe said he expected an average pick-up in revenues of 2 to 3 per cent across the market.

"I think expectations are relatively modest."

Elliffe said companies in cyclical industries, such as Fletcher Building, would probably be able to give a clearer indication of what they were forecasting but for others it remained difficult.

"It's pretty hard to give solid guidance when there is still not a huge amount of visibility."

Last year there had been an expectation that the domestic economy would recover but retail and housing market figures took a turn for the worse after August.

"It's still pretty challenging."

Companies with direct exposure to tourism, such as Sky City, Auckland Airport and Air New Zealand, would be expected to benefit from the upcoming Rugby World Cup.

But Elliffe said given that was a one-off event it was hard to know how relevant it would be for the long-term share price.

First NZ Capital head of research Rob Bode said overall the season would not be "too bad".

"But there are still companies doing it tough. We are expecting a loss for PGG Wrightson and Tourism Holdings."

Bode said Tourism Holding's profit downgrade on Friday was not surprising given the fall in visitor arrivals from Britain and the weather issues in Australia. New Zealand Oil and Gas was also expected to report its negative impact from the receivership of coal mine Pike River Coal.

Overall he expected an average of 5 per cent earnings per share growth.

Bode said transport companies such as Auckland Airport and Port of Tauranga were expected to do well as they showed a recovery from a fairly soft period last year. NZ Refining would also benefit from the pick-up in the oil price.

But he expected company forecasts to remain cautious.

"The ones that will be a little bit more positive will be those influenced by the Rugby World Cup and the rebuilding of Christchurch.

"The question in our minds is how long do we go through this dull period in the economy until we see a pick-up? The economists keep revising that. The rebalancing and deleveraging seems to be taking longer to play out than we thought.

"It's all tied to confidence and that's not helping."